VinFast steers Vingroup’s India expansion amid US EV headwinds

The conglomerate’s twin announcements over the past month - to invest over $500 million in India through electric vehicle (EV) maker VinFast and scale up overall investments to $5 billion in the country to explore entry by other group firms - come as it pulls back from an aggressive push in the US automobile market.

VinFast, which has helped the group expand internationally and open operations in markets like the US, is not eyeing store expansion in the North American market for now, and is doubling down on Asian markets like India instead to help offset any loss. The EV maker, the conglomerate’s only listed firm in the US market, has seen its shares fall 18% as against a 21% rise by Nasdaq so far this year.

Starting next year, VinFast expects a large part of its overall ramp-up coming from India as it also plans to foray into two-wheeler and electric bus segments. Almost 90% sales of the car brand currently comes from Vietnam, but the management wants to increase presence in the overseas markets as well.

“India is a strategic growth pillar in VinFast’s overseas portfolio, complementing mature markets like the US with high-growth, high-potential markets. Together, these markets enable VinFast to balance near-term realities with long-term ambitions," Pham San Chau, managing director and chief executive officer at Vingroup Asia, said in email responses to Mint.

On 4 December, VinFast announced a $500 million investment for expansion of its manufacturing plant in Tamil Nadu, as it looks to begin foray into electric two-wheelers and buses.

On 9 December, Vietnam's biggest conglomerate announced a plan to invest $3 billion in a phased manner in Telangana, which will include development of EV charging infrastructure, an electric taxi fleet along with entry of its real estate firm VinHomes, and tourism and entertainment venture VinWonders. The conglomerate will also explore new EV manufacturing facilities in the state.

In total, it has already committed $2 billion to its auto venture VinFast, while the additional $3 billion will be spread across the EV ecosystem and the entry of new businesses such as VinHomes.

These developments come after VinFast rolled out first vehicle off its plant in Tamil Nadu in August this year and introduced two electric SUVs, VF6 and VF7, in the Indian market in September.

The expansion will see its automobile footprint in the country increase, as the management expects the Indian market to be a key pillar for growth.

Chau’s comments on India driving growth and complementing Western markets come after VinFast chairperson Thuy Thu Le told US investors and analysts last month that the company would take its foot off the pedal in the US market.

“Given the tariff situation and the instability in the EV market, we just need to see how that settles before we kind of push hard in the US," Thu Le said in an earnings call on 21 November. “I think until we see some growth and stability in the US market, we don’t intend to open more dealerships."

Analysts suggest that the performance of VinFast, which is the first firm of the Vingroup in the Indian market, would act as a litmus test for the group in its bid to expand in the Indian market.

Puneet Gupta, director at S&P Global Mobility, said that announcements by Vingroup to build infra projects and presence across India show it is a serious diversified large group.

“The conglomerate is taking a bet on India and it is investing to build trust in the minds of Indian consumers. In a way, the pace at which it expands its presence in other businesses will only help the company in its auto bid as consumers will have more trust in brand and better recall value," Gupta said.

He added that the Indian market offers a key cushion to the group as it is insulated from competition from Chinese automotive players.

The Trump administration's decision this year to scrap EV tax credits, and raise tariffs on automobile imports has forced companies to go back to the drawing board on EVs. VinFast’s slowing down its push in the US market was joined by Ford Motor Company that announced on 16 December that it is writing off $19.5 billion in investments.

While the Vingroup is expanding its presence in India through more investments in the automotive business as well as entry of new group firms, its footprint in the US, where it started selling its vehicles in 2023, is shrinking. As per US news outlet Automotive News, VinFast's dealership count has fallen to 22, while its sales this year have more than halved compared to last year, selling 1,500 EVs between January and October.

In the US, it competes with the likes of Elon Musk's Tesla, Hyundai, Kia, Ford and General Motors.

By contrast, its prospects in the Indian market have only surged. Vehicles sales reached 700 units in just three months of its operations in the country, while dealerships count has reached 24, which will expand to 35 by year-end.

While the firm is building a plant in the US, which is expected to be up and running by 2028, the Indian facility is already active with 50,000 annual capacity, scalable to 150,000 units.

The contrasting outlooks for both the markets are understandable, given the fact that EV sales are in two different directions. In India, Federation of Automotive Dealers Associations data suggested that EV sales surged about 80% to reach nearly 120,000 units in the April to November period.

The Indian market offers the company an opportunity to compete with manufacturers such as Tata Motors, Mahindra & Mahindra, Maruti Suzuki and Hyundai as it seeks to gain market share.

Meanwhile, estimates from Cox Automotive suggest that EV sales in the US are set to stall this year with a 2.1% year-over-year decline expected in 2025 at 1.275 million units.

A bullish outlook on India is driving the Vietnamese conglomerate to expand its presence, with the announcement of its real estate arm VinHomes’ entry into the market.

"Vingroup plans to develop the Vinhomes Smart City mega urban area designed for approximately 200,000 residents on a 1,080-hectare site (in Telangana)," the company said in a 9 December announcement. Moreover, the company will also look to introduce theme park business VinWonders and renewable energy firm VinEnergo.

VinFast is key to the group’s expansion plans, with Vingroup founder Pham Nhat Vuong committing at least $2 billion of his personal wealth to the EV maker over two years to support its global expansion.

“Sales in our first month in India exceeded our internal forecast, reflecting a decisive market debut and a stronger start than any of our previous Asia launches. In October, VinFast ranked within the top eight for EV registration in the country," Thu Le said in the earnings call.

Next year, VinFast expects that about 70-80% of its sales will come from the domestic market, suggesting that the share of international sales is going to inch up.

Although the group is expanding in the Indian market rapidly, Chau insists that it would not be accurate to put markets in hierarchy.

“Like the United States, India is an important market for VinFast. VinFast is executing a diversified global expansion strategy, and India plays a very important and distinct role within that framework," Chau said, adding that it would not be accurate to characterize India as a replacement for the US, or to rank markets in isolation.

“In short, VinFast’s global strategy is about building a resilient, multi-market presence. The US remains strategically important, while India represents a key engine for future growth — both are essential to our long-term international vision," Chau added.